News / Economy

US Anti-Corruption Law Snags Major Tech Company

FILE-This Tuesday, Aug. 21, 2012, file photo, shows an exterior view of Hewlett Packard Co.'s headquarters in Palo Alto, California.
FILE-This Tuesday, Aug. 21, 2012, file photo, shows an exterior view of Hewlett Packard Co.'s headquarters in Palo Alto, California.
Earlier this month, the U.S. technology company Hewlett Packard agreed to plead guilty to bribery charges involving its Russian, Polish, and Mexican subsidiaries. 
 
Hewlett Packard admitted to the U.S. Department of Justice that it bribed Russian officials in hopes of landing a lucrative contract with Moscow’s Office of the Prosecutor General.  In Poland, HP admitted to bribery connected to contracts with the national police agency, while in Mexico, the illicit cash was tied to deals with Pemex, the state oil company.
 
What snared Palo Alto, California-based “HP” is the Foreign Corrupt Practices Act (FCPA), a groundbreaking law enacted nearly four decades ago.
 
HP’s agreement to pay US$108 million in both criminal and civil penalties is the tenth largest settlement ever under the FCPA. Other corporations that have been caught in FCPA’s net include Walmart, Halliburton, KBR, Siemens, BAE Systems, and Daimler AG.
 
Julie DiMauro, Executive Editor of the anti-corruption FCPA Blog, describes the impact upon HP for getting caught.  “The penalty amount,” she says, “might not be the true deterrent here. What could be, to it and other companies, is the ample negative publicity it is getting for its actions in multiple countries.”
 
The Foreign Corrupt Practices Act was signed into law by President Jimmy Carter in December, 1977. It was enacted in the wake of a U.S Securities and Exchange investigation that found more than 400 U.S. corporations had collectively paid more than $300 million in bribes to foreign officials and political parties. 
 
“The passage of the FCPA itself was revolutionary,” says Sarah Pray at the good governance and accountability organization Open Society Foundations. “In an era when you could still deduct bribes from your taxes in some countries, the United States took a stand.”
 
The FCPA casts a broad shadow covering both corporations and individuals. Under the law’s provisions, anyone – regardless of nationality - is in violation of the law if they engage in bribery while in the United States.  That denies legal haven to foreigners engaging in corrupt activities offshore while in the U.S. The FCPA also applies to U.S. citizens’ financial actions overseas.  And, since 1997, it covers foreign corporations that are traded on U.S. stock exchanges and securities markets.
 
The FCPA also blocks the use of proxies to engage in illegalities.

“The FCPA’s third party liability provisions,” says Washington attorney and FCPA expert Lucinda Low, “makes it a crime to make a payment to any person, knowing that the payment or other value will be passed through in whole or in part of a foreign government official or other covered [by the FCPA] recipient.”
 
Interestingly, though, so-called facilitation or “grease” payments to foreign officials may be legal under FCPA, if done to expedite that official’s performance of duties.  And, payments to foreign officials may also be legal if the host country permits such activity.
 
Enacting the FCPA promoted a number of other nations to follow suit.   Britain passed the Bribery Act, while Canada enacted a similar law. Anti-corruption laws have been enacted in China, Thailand, Malaysia, Brazil, and many other countries. The United Nations has responded by enacting the U.N. Convention on Corruption, while the 40 state Organization for Economic Cooperation and Development (OECD) enacted, in 1997, an Anti-Bribery Convention, though the anti-corruption group Transparency International chides the OECD for not insisting its member states more aggressively enforce the provisions of that agreement.
 
While the FCPA has a broad reach, a former Justice Department FCPA prosecutor says it has a limitation – time – that needs to be changed. 

“I think there are statute of limitations issues [within the FCPA],” says Kathleen Hamann. ”A lot of complex economic crimes in the U.S. have a 10 year statute of limitations. But, the FCPA has a five year statute of limitations.” Hamann, now in private practice, adds”I think there are a lot of individuals who end up not being prosecuted because the statute of limitations has run out.” She says “I think we need to treat it [bribery and other crimes covered by FCPA] as what it is, a complex financial crime.”
 
Sarah Pray calls for the FCPA’s expansion in another direction.

“The United States should outlaw all commercial bribery, not just bribery of foreign officials. Secondly,” Pray adds, “the United States should outlaw ‘facilitation payments. The line between a bribe and a facilitation payment is a blurred one, and this distinction should be eliminated.”
 
Along with penalties for misbehavior, Lucinda Low says the FCPA has compelled the business world to become proactive. “FCPA”, she says, “created expectations that companies will institute internal programs and controls to prevent, detect, and remediate bribery and corruption throughout their organizations. “

Jeffrey Young

Jeffrey Young came to the “Corruption” beat after years of doing news analysis, primarily on global strategic issues such as nuclear proliferation.  During most of 2013, he was on special assignment in Baghdad and elsewhere with the Special Inspector General for Iraq Reconstruction (SIGIR).  Previous VOA activities include VOA-TV, where he created the “How America Works” and “How America Elects” series, and the “Focus” news analysis unit.

You May Like

Video Video Claims to Show Shi'ite Forces in Iraq Executing Sunni Boy

While not yet independently confirmed, brutal killing already has gotten attention of Islamic State followers on social media More

After Six Years, Little Change for Niger Delta's Former Militants

Nigerians who laid down arms in exchange for government amnesty subsidies fear program may end with upcoming presidential elections More

Vietnam Pushes for More Educated Drivers to Curb Road Deaths

Transportation officials hope that making a greater effort to get drivers to learn the rules of the road will reduce fatal crashes More

This forum has been closed.
Comment Sorting
Comments
     
by: ed
April 24, 2014 10:52 PM
Julie DiMauro, Executive Editor of the anti-corruption FCPA Blog, describes the impact upon HP for getting caught. “The penalty amount,” she says, “might not be the true deterrent here. What could be, to it and other companies, is the ample negative publicity it is getting for its actions in multiple countries.”

Thanks Julie. Actually, the true deterrent here doesn't exist, which is likely by design if those evil companies bribed local officials too in order to have the law written in a way that wouldn't present a real threat. Until the public forces government to treat the Directors of Global Money Grab Inc like it does poor people and slams their crooked butts into a cage, it will continue to be business as usual for the Government Industrial Complex. Here no evil, see no evil, speak no evil.

by: Gervazio Degan from: Joao Pessoa, Brazil
April 21, 2014 10:22 AM
I don't understand because Brazil is not cited among the countries bribed.

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
NASA Spacecraft Approaches a Dwarf Planeti
X
George Putic
March 04, 2015 8:51 PM
NASA’s Dawn spacecraft will make history on Friday, March 6, when it becomes the first man-made object to orbit a dwarf planet named Ceres. It is located in the asteroid belt between Mars and Jupiter, almost 500 million kilometers from Earth. Among other objectives, Dawn will try to examine two mysterious bright white spots detected on the planet’s surface. VOA’s George Putic has more.
Video

Video NASA Spacecraft Approaches a Dwarf Planet

NASA’s Dawn spacecraft will make history on Friday, March 6, when it becomes the first man-made object to orbit a dwarf planet named Ceres. It is located in the asteroid belt between Mars and Jupiter, almost 500 million kilometers from Earth. Among other objectives, Dawn will try to examine two mysterious bright white spots detected on the planet’s surface. VOA’s George Putic has more.
Video

Video Young Muslims Radicalized Online

Young Muslims are being radicalized ‘in their bedrooms’ through direct contact with Islamic State or ISIL fighters via the Internet, according to terror experts. There are growing concerns that authorities and Internet providers are not doing enough to counter online extremism - which analysts say is spread by a prolific network of online supporters around the world. Henry Ridgwell reports from London.
Video

Video African Americans Recall 1960's Fight For Voting Rights

U.S. President Barack Obama and thousands of people will gather in the small southern U.S. city of Selma, Alabama, Saturday, March 7th to commemorate the 50th anniversary of a historic voting rights march that became known as “Bloody Sunday." VOA’s Chris Simkins traveled to Alabama and introduces us to some of the foot soldiers of the voting rights struggles of the 1960’s.
Video

Video Positive Messaging Transforms Ethiopia's Image

Ethiopia was once known for famine and droughts. Now, headlines more often point to its fast-growing economy and its emergence as a regional peacemaker. How has Addis Ababa changed the narrative? VOA's Marthe van der Wolf reports.
Video

Video Cyber War Rages Between Iran, US

A newly published report indicates Iran and the United States have increased their cyber attacks on each other, even as their top diplomats are working toward an agreement to guarantee Iran does not develop a nuclear weapon and to free Iran from international sanctions. The development is part of a growing global trend. VOA’s Al Pessin reports from London.
Video

Video Answers Elude Families of MH370 Passengers

For the families on board Malaysia Airlines flight MH370, an airline official’s statement nearly one year ago that the plane had lost contact with air traffic control at 2:40 AM is the only thing that remains confirmed. William Ide reports.
Video

Video Land Disputes Arise Amid Uganda Oil Boom

Ugandan police say there has been a sharp increase in land disputes, with 10 new cases being reported each day. The claims come amid an oil boom as investors appear to be cashing in by selling parcels of land to multiple buyers. Meanwhile, the people who have been living on the land for decades are chased away, sometimes with a heavy hand. VOA's Serginho Roosblad reports.
Video

Video In Russia, Many Doubt Opposition Leader's Killer Will Be Found

The funeral has been held in Moscow for Boris Nemtsov, the opposition leader who was assassinated late Friday just meters from the Kremlin. Nemtsov joins a growing list of outspoken critics of Russia under the leadership of President Vladimir Putin who are believed to have been murdered for their work. VOA’s Daniel Schearf reports from Moscow.
Video

Video Simulated Astronauts Get Taste of Mars, in Hawaii

For generations, people have dreamed of traveling to Mars to explore Earth's closest planetary neighbor. VOA's Mike O'Sullivan reports that while space agencies like NASA are planning manned missions to the planet, some volunteers in Hawaii are learning how humans will cope with months in isolation on a Mars base.
Video

Video Destruction of Iraq Artifacts Shocks Archaeologists

The city of Mosul was once one of the most culturally rich and religiously diverse cities in Iraq. That tradition is under attack by members of the Islamic State who have made Mosul their capital city. The Mosul Museum is the latest target of the group’s campaign of terror and destruction, and is of grave concern to archaeologists around the world. VOA’s Kane Farabaugh reports.
Video

Video Smartphones May Help in Diagnosing HIV

Diagnosing infections such as HIV requires expensive clinical tests, making the procedure too costly for many poor patients or those living in remote areas. But a new technology called lab-on-a-chip may make the tests more accessible to many. VOA’s George Putic reports.
Video

Video Afghan Refugees Complain of Harassment in Pakistan

Afghan officials have expressed concern over reports of a crackdown on Afghan refugees in Pakistan following the Peshawar school attack in December. Reports of mass arrests and police harassment coupled with fear of an uncertain future are making life difficult for a population that fled its homeland to escape war. VOA’s Ayesha Tanzeem reports from Islamabad.

All About America

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More

World Currencies

EUR
USD
0.8954
JPY
USD
119.75
GBP
USD
0.6515
CAD
USD
1.2518
INR
USD
61.921

Rates may not be current.